French oil and gas company Total has signed an agreement with Russian counterpart Novatek to acquire a direct working interest of 10 per cent in Arctic LNG 2, a giant liquefied natural gas project led by Novatek on the Gydan Peninsula in Russia.

Total, which has been present in Russia for almost 25 years, already holds 19 per cent stake in Novatek, which intends to retain 60 pct of the project, resulting in the group’s overall economic interest in the LNG project of approximately 21.5 pct.

Should Novatek decide to reduce its participation below 60 pct, Total will have the possibility to increase its direct share up to 15 pct.

The duo also agreed to allow Total to acquire a 10 to 15 pct direct interest in Novatek’s future LNG projects in Yamal and Gydan.

“This project fits into our strategic partnership with Novatek and also with our sustained commitment to contribute to developing the vast gas resources in Russia’s far north which will primarily be destined for the strongly growing Asian market,” said Patrick Pouyanné, Chairman and CEO of Total.

With a production capacity of approximately 19.8 million tons per year (Mt/year), or 535,000 barrels of oil equivalent per day (boe/d), Arctic LNG 2 is expected to unlock more than 7 billion boe of hydrocarbons’ resources in the onshore Utrenneye gas and condensate field.

The project will involve the installation of three gravity-based structures in the Gulf of Ob on which the three liquefaction trains of 6.6 Mt/year capacity each will be installed.

Arctic LNG 2 production will be delivered to international markets by a fleet of ice-class LNG carriers that will be able to use the Northern Sea Route for cargoes destined for Asia, the same as for Yamal LNG in which Total holds 20 pct stake.

The final investment decision is expected in 2019, with plans to start up the first train by end 2023, Total said.